Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. De C.V., Civil Action No. 11–1623 RC

• Court: United States District Courts. United States District Court (Columbia)
• Writing for the Court: RUDOLPH CONTRERAS, United States District Judge
• Citation: 69 F.Supp.3d 175
• Decision Date: 25 September 2014
• Docket Number: Civil Action No. 11–1623 RC
• Parties: Paleteria La Michoacana, Inc. et al., Plaintiffs & Counter–Defendants, v. Productos Lacteos Tocumbo S.A. De C.V., Defendant & Counter–Claimant.

69 F.Supp.3d 175

Paleteria La Michoacana, Inc. et al., Plaintiffs & Counter–Defendants
v.
Productos Lacteos Tocumbo S.A. De C.V., Defendant & Counter–Claimant.

Civil Action No. 11–1623 RC

United States District Court, District of Columbia.

Signed September 25, 2014

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Ana-Maria Ignat, G. Brian Busey, Morrison & Foerster, LLP, Ariel Fox Johnson, Karin H. Johnson, Shepppard Mullin Richter & Hampton LLP, Jeff Edward Schwartz, Benjamin E. Maskell, Fox Rothschild, LLP, Steven Marc Schneebaum, Steven M. Schneebaum, P.C., Washington, DC, Joyce Liou, Nathaniel Bryan Sabri, Wendy M. Garbers, Rosemary S. Tarlton, Morrison & Foerster, LLP, Laura L. Chapman, Sheppard, Mullin, Richter & Hampton, LLP, San Francisco, CA, for Plaintiffs & Counter-Defendants.

Steven Michael War, McNeely, Hare & War LLP, Washington, DC, Stephen L. Anderson, Anderson & Associates, Temecula, CA, for Defendant & Counter-Claimant.

Re Document Nos.: 114, 116, 119, 128

MEMORANDUM OPINION

Granting In Part and Denying In Part Plaintiffs' Motion for Summary Judgment; Granting In Part and Denying In Part Defendant's Motion for Summary Judgment; Denying Defendant's Motion to Strike; and Denying Plaintiffs' Motion In Limine

RUDOLPH CONTRERAS, United States District Judge

I. INTRODUCTION

Before the Court is a highly contested trademark action that raises complex factual and legal issues. This case arrived here when Plaintiffs, Paleteria La Michoacana, Inc. and Paleteria La Michoacana, LLC (collectively, “PLM”), brought suit against Defendant Productos Lacteos Tocumbo S.A. De C.V. (“PROLACTO”) challenging a decision by the Trademark Trial and Appeal Board (“TTAB”) regarding various registered and unregistered trademarks used to sell “Mexican-style” ice cream bars, called paletas, and other frozen

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ice cream treats. PROLACTO responded by filing a counterclaim that asserts several counts against PLM under various sections of the Lanham Act, 15 U.S.C. § 1051 et seq., as well as District of Columbia common law. PLM and PROLACTO each filed motions for partial summary judgment in which they seek a ruling on most counts in the complaint and counterclaim. Upon consideration of the parties' motions, the memoranda in support thereof and opposition thereto, and the voluminous evidentiary record submitted by both parties to supplement their summary judgment filings, the Court will grant in part and deny in part each party's motion.

II. BACKGROUND

At the heart of this action is a fight over the right to use certain trademarks in the sale of paletas—which are “Mexican-style” ice cream bars traditionally made from fruit, spices, and nuts, and sold in trucks and supermarkets—and other similar frozen ice cream treats within the United States. PROLACTO and PLM dispute, whether for factual reasons or on evidentiary grounds, nearly all of the hundreds of “facts” proffered to support their respective motions for summary judgment. Nonetheless, after wading through the extensive evidentiary records provided by both parties to support their motions, the Court finds that the following background facts have been established. To the extent additional relevant and material facts remain in dispute, those factual discrepancies are discussed in more detail as they arise throughout this Memorandum Opinion.

PROLACTO is a family-owned company founded in Mexico in 1992. The family that founded the company has a long history of operating ice cream stores (“paleterias”) and selling ice cream and fruit bars in various cities and towns throughout Mexico stretching back to the 1940s. PROLACTO's historic use and ownership in Mexico of the marks at issue is largely in dispute and mostly irrelevant to the legal issues at hand, but beginning in 1995, PROLACTO started successfully registering with the Mexican Institute of Intellectual Property many of these marks, including the term “LA MICHOACANA NATURAL.”¹ A few years later, PROLACTO began entering licensing agreements in the United States with close family members of the company's founding directors. Through these agreements, PROLACTO authorized the licensees to use within the United States some of the marks PROLACTO had been using and registering in Mexico. The evidentiary record shows that PROLACTO has not produced, advertised, or sold its ice cream products directly to consumers inside the United States, and the company has not directly operated any stores within the country. Instead, PROLACTO's use of the disputed marks inside the United States arises through its licensing agreements.²

The first license occurred in 1999, when Rigoberto Fernandez, with permission

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from PROLACTO, opened a paleteria called LA MICHOACANA in Homestead, Florida. In April 2001, Fernandez and his sister, Mary Fernandez, opened a second paleteria under the same name in West Palm Beach, Florida, where they used PROLACTO's Mexican marks for the sale of ice cream products. In October 2002, again through a license with PROLACTO, Mary Fernandez opened a paleteria under the name Michoacana Natural Ice Cream in Rosenberg, Texas, a suburb of Houston. Sometime between 2004 and 2006, Mary Fernandez opened a second licensed store in Houston. She ultimately added several additional ice cream parlors in Houston over the next few years, although the exact number and timing is disputed. Finally, in July 2009, PROLACTO licensed the opening of a Michoacana Natural Ice Cream store in Sonoma, California, which makes and sells paletas, ice cream, and drinks on site. PROLACTO's California licensee has not operated any other ice cream parlors in the Sonoma area since July 2009. PROLACTO has no licensees in the District of Columbia or any other state not discussed herein.

Turning to PLM's history, in 1991 brothers Ruben Gutierrez and Ignacio Gutierrez started an ice cream business called Paleteria Michoacana as an informal partnership in the city of Turlock, which is in northern California. Shortly after Ignacio Gutierrez was married, in April 1999, the Gutierrez brothers dissolved their partnership, and from late April 1999 until 2002, Ignacio Gutierrez operated the Paleteria Michoacan ice cream business as a sole proprietorship in the same location in Turlock, California. In 2002, Ignacio Gutierrez created a California corporation known as Paleteria La Michoacana, Inc. and served as its president, sole shareholder, and sole director from 2002 until early 2011, at which time Paleteria La Michoacana, LLC, as assignee of the assets of Paleteria La Michoacana, Inc., took over the business.

PLM's products are made in a factory in California before being distributed throughout various parts of the country, where they are sold at large club stores like Costco, supermarkets like Wal–Mart, Hispanic grocery stores like El Super and Vallarta, drug stores like Walgreens, and a variety of other retail outlets. PLM has not sold products directly to consumers in Florida. And like PROLACTO, PLM's products are not sold or distributed in the District of Columbia, although PLM's goods are sold in numerous other states across the country. In fact, although they both sell products within the same broad category of frozen ice cream treats, PROLACTO's licensee's goods and PLM's goods cross paths in limited geographical areas within the United States, namely Texas, where PLM has distributed ice cream products such as paletas since sometime in 2005, and northern California, where the respective parties' goods are sold in the same general area within one mile or so. In at least one instance, the companies' goods are sold at the very same store in Houston.

Finally, the parties' ice cream products are relatively inexpensive treats typically purchased on impulse. For example, PLM's four ounce single serve fruit and ice cream bars sell at retail for approximately $0.89 to $1.19, while PLM's three ounce bars are sold at retail in packages of six for between $2.49 to $4.49. Paletas sold by PROLACTO's United States licensees are slightly more expensive at a retail price of approximately $1.75 to $2.00 each, but they are larger than PLM's bars and still remain inexpensive consumer items typically purchased on impulse.

A. Marks In Dispute

As noted in the introduction, this action involves a dispute between PLM and PROLACTO

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over the right to use certain registered and unregistered marks during the sale of ice cream products in the United States. The central marks at issue include the so-called Indian Girl design, as well as marks bearing various forms of the word “Michoacán.” Below is a graphic displaying some of the marks in dispute between the companies:

B. Procedural History

Before arriving at this Court, PROLACTO filed a petition with the TTAB to cancel PLM's trademark No. 3,210,304 for the mark LA INDITA MICHOACANA and design, shown above, for use on ice cream and fruit products, namely fruit bars. The TTAB granted PROLACTO's petition, finding a likelihood of confusion between several, but not all,...